Main points of investment

Event: on August 15, 2023, Dragon soft Technology released a report for the first half of 2023. In the first half of 2023, the company achieved operating income of 139 million yuan, an increase of 20.8% in the same period last year, and a net profit of 38 million yuan, up 33.5% from the same period last year. Deducting non-homed net profit was 37 million yuan, an increase of 30.5% over the same period last year.

Focus on the coal industry software, revenue and profits are growing rapidly. The company's main business is based on the independently developed LongRuanGIS platform, using cloud computing, big data, Internet of things and other technologies to provide overall solutions for intelligent mines, intelligent safety supervision and smart park construction. The company has been ploughing the coal industry for more than 20 years, and its products can effectively achieve the technical requirements of across multiple standards, heterogeneous platforms and multi-source data fusion, and meet the comprehensive needs of information and intelligence under the complex geological conditions of coal mines. Customers have reached 44 of the top 50 coal enterprises in China in 2021, covering more than 1800 pairs of mines. Thanks to the country's attention and promotion to the construction of intelligent mines, the company achieved an operating income of 139 million yuan in the first half of 2023, an increase of 20.8% in the same period last year, and new orders reached 258 million yuan, laying a good foundation for follow-up business.

The competitive advantage of integrated service is obvious, and the performance of intelligent guarantee mining is outstanding. The company has complete technical system, product system and service system in the field of intelligent mine information, product matrix includes intelligent management and control platform based on LongRuan GIS, intelligent geological guarantee system, intelligent mining and ventilation system, industrial Internet of things application products, intelligent washing system platform, etc., covering coal mine fully mechanized mining, driving, mining and other working faces, can provide comprehensive information and intelligent solutions for large and medium-sized coal mines. During the reporting period, the business of intelligent management and control platform continued to grow steadily; the business of intelligent geological security grew rapidly, with business income of 29 million yuan, accounting for more than 20% of revenue; and the total income and proportion of intelligent mining ventilation business achieved rapid growth.

R & D innovation consolidates core advantages, and the layout of intellectual property rights is further optimized. The company has long been committed to the independent research and innovation of the core technology of the mine GIS software basic platform, adheres to the development strategy of independent research and development, and has a strong commercial application ability of R & D achievements. Construct and improve the "one map" of GIS collaboration in the field of core business coal mine intelligence

And "four" core patent groups, such as intelligent management and control platform related patent group, intelligent fully mechanized mining face related patent group, transparent GIS mining related patent group, new mining method and equipment related patent group. In the first half of 2023, R & D investment was 21 million yuan, an increase of 13.2% over the same period last year, accounting for 15.4% of revenue. Five new invention patents were granted, and 10 software copyrights and 1 utility model patent were obtained independently.

Mine GIS to cloud service transformation, digital twins to build a transparent mine. The integrated collaboration of cloud and client based on cloud service can improve the convenience of data processing, realize cloud interconnection and collaborative sharing, greatly reduce the threshold of industrial software use and operation and maintenance, and enable the transformation of small and medium-sized coal mines. The new generation of Dragon soft Cloud GIS platform provides service platforms based on artificial intelligence, cloud services and industrial Internet architecture, reducing the strong dependence and coupling within the system, and has new features such as multi-end integration, cross-platform, cloud services, cloud collaboration, two-and three-dimensional integration and so on. In addition, digital twin, virtual simulation and other technologies are applied more deeply in the industry, and the company's transparent digital twin management cloud platform can realize holographic visualization of production factors, collaborative control of production system, and intelligent calculation of production management. to provide fast and effective support for coal mine safety production management decision-making.

AI supports intelligent mine construction, and the large model expert system is preliminarily realized. With the breakthrough and application of AI technology represented by GPT and large model, more and more attention has been paid to the research and application of AI in intelligent mine construction, which is expected to open up a new growth pole in the mining industry. The company actively explores and develops AI large model application technology, sets up a special team to study AI cutting-edge technology, studies the construction of mine vertical domain knowledge base and model base system framework based on large model based on GPT's strong knowledge reasoning ability, and preliminarily realizes AI capability and coal mine field expert system with time and space characteristics, and the key technical level will reach the domestic advanced level. In the future, the AI model will be further integrated with the vertical industry, reshape the production mode of the mining industry, and provide strong help for the construction of intelligent mines.

Investment suggestion: at present, the state has issued a number of important documents to implement the construction of intelligent mines. The company has a first-mover advantage in the field of intelligent mines, a series of intelligent mining industry software industry leading, with high growth. We predict that the company's income from 2023 to 2025 will be RMB 4.79 million, an increase of 31.4%, 30.8%, 30.2% and 1.17%, respectively, with a net profit of 155.06 million, an increase of 45.6%, 33.3%, 32.7%, and a corresponding EPS of 1.62, 2.16, 2.86 and 27.0, 20.3, respectively.

Risk tips: the construction of intelligent mines is not as expected, the expansion of talents is not as expected, and the market competition is intensified.